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Improving market presence of JGT - Survey & observations NJB - CFC/IJSG/21 Strictly Private and Confidential March 2014 www.pwc.com Submitted by PwCPL

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Page SectionOverview Table of Contents This proposal does not constitute a contract to perform services. Final acceptance of this engagement by PricewaterhouseCoopers is contingent upon successful completion of PricewaterhouseCoopers' acceptance procedures. Any engagement arising out of this proposal will be subject to the execution of our formal engagement contract, including our standard terms and conditions and fees and billing rates established therein. 1 Background 1 2 Detailed Methodology 3 3 Key Findings Domestic & International Markets 5 4 Key future considerations 13 5 Appendix 19

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PricewaterhouseCoopers Private Ltd Background Section 1

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PwC March 2014 Identify the market need, assessment of supply chain of Jute Geotextiles (JGT) for three specific uses 1.erosion control of river bank 2.erosion control of hill slopes and 3.construction of rural roads Identify improvement opportunities in the JGT supply chain to meet the market need Acknowledgement Project financed by Common Fund for Commodities (CFC) - an inter-governmental financial institution established within the framework of the United Nations The project is supervised by the International Jute Study Group (IJSG) The project execution agency is the National Jute Board (NJB) and has engaged PwC (PricewaterhouseCoopers) to undertake this engagement The Nodal Agency Jute Diversification Promotion Centre (JDPC) Objective 2 Section 1 Background NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations

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PricewaterhouseCoopers Private Ltd Detailed Methodology Section 2

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PwC March 2014 Data gathering targeted - To understand the demand and maturity of supply chain of Geotextile and to understand where Jute GeoTexties (JGT) would be featuring in the universe of all Geotextiles - To understand the competition threat from synthetic and other natural Geotextile to JGT - To compile local and International policies and their relevance favouring JGT - To gain insights into technical issues of supply chain of JGT - To compile case-studies on previous experiences of JGT applications and profile of the users - To collect feedback on awareness and users perception about JGT - To prepare predictive demand analysis of JGT in India, Bangladesh and other relevant countries in the three focus sector Methodology of the research 4 Section 2 Detailed Methodology NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations Primary survey Market potential modelling data Secondary information collection

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PricewaterhouseCoopers Private Ltd Key Findings Domestic & International Markets Section 3

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PwC March 2014 If JGT captures 10-20% of the total potential market of India yearly need will be 97 Million Sq. Mt. and 24 Million Sq. Mt. Totalling around 125 Million Sq. Mt. which includes rural road, river bank erosion, hill slope erosion and railways embankment, we would have - Yearly savings valued at around USD 125 million and will benefit the Jute industry and farmers. - More focus on Local Demand and optimized supply chain Domestic demand will be sufficient to overflow the available capacity of jute mills and would provide a steady demand which is around 25% on the average for Woven type of 627, 724, 760 gsm. Production capacity is available for 500, 600 & 700 gsm Open Weave but the production needs to be diverted to get local usage Domestic demand assessment India & Bangladesh 6 Section 3 Key Findings Domestic & International Markets NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations

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PwC March 2014 Global demand 8 Section 3 Key Findings Domestic & International Markets NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations Data in Million Sq. Mt.

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PwC March 2014 For Erosion Control and estimated by Erosion Control Technology Council (ECTC) estimates the consumption share of organic erosion control products by region can be estimated as follows: Moreover the world consumption share of organic erosion control products by type can be estimated as follows: Potential international markets 10 Section 3 Key Findings Domestic & International Markets NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations Product TypeMarket Share (%) Excelsior/ straw59 Coir22 Jute19 RegionMarket Share (%) North America66 Europe20 Rest of the world14

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PwC March 2014 The major share of the global demand will generate in Asia Pacific region (53%) in 2018 followed by North America (19%) and Western Europe (15%) Coir geotextiles is the major competitor to JGT in natural geotextiles sector Present consumption of JGT is around 50-55 million sqm globally. Although trade does exist in the global geotextile industry, most of the production in the larger developed markets occur at local facilities. Primarily due to: - need for custom design and the corresponding close contact with customers. - Ability of suppliers also provide additional related services such as site design and geotextile installation. Global demand 9 Section 3 Key Findings Domestic & International Markets NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations

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PwC March 2014 Mills targets mainly export. Hence the internal requirement is not catered for to large extent. Experimental projects which were undertaken in Bangladesh and India have started yielding value. We need to capitalize the result to popularize the product with Government and executing Engineers Discussion with Policy makers would be helpful for better usage of JGT SGT is being used in all the focus areas we would need to break into the market of SGT to have at least 15% of the market of Geotextiles Coir and Straw based Geo textiles also is a strong competition for natural fibre based Geotextile The supply chain between Farmer to Mill and Mill to End Customer need to be properly established so that we can have a smooth movement of JGT and measure the effectiveness India has initiated a mandatory % use of JGT in focus areas Bangladesh may also consider the same. A strong Industry Academia Government collaboration is needed Some points to ponder - Bangladesh and India local market 7 Section 3 Key Findings Domestic & International Markets NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations

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PwC March 2014 USA The North American geotextile market is famous for its vast opportunities. The region accounts for roughly 21% of the global geotextile market which corresponds to roughly 770 million sq.mt. Erosion control is the most relevant market segment for potential use of Jute Geotextiles. The market size of this segment is estimated at around 43 million sq.mt. Two of the biggest contributors to erosion are construction sites and urban runoff consumers are construction & landscape companies International export potential of JGT 11 Section 3 Key Findings Domestic & International Markets NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations Figure : North American Geotextile Applications

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PwC March 2014 International export potential of JGT 12 Section 3 Key Findings Domestic & International Markets NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations EUROPE Europe accounts for approximately 16% of the global geotextile market which corresponds to roughly 590 million sq.mt. Market share of natural geotextile is around 7% of the total geotextile market. Based on this it can be estimated that the potential market for Jute Geotextile in Europe is approximately 41 million sq.mt. Europe has imposed an additional fee (as fine) on the usage of synthetics for landscaping purpose, which will make synthetics less price competitive. Keeping in mind these factors, there seem to be a good potential for Jute Geotextiles.

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PricewaterhouseCoopers Private Ltd Key future considerations Section 4

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PwC March 2014 Structure of the JGT sector Porters five forces 14 Section 4 Key future considerations NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations There are a lot of factors that new entrants have to overcome if they want to be able to compete successfully with the JGT market in India and Bangladesh. Existing players are having great advantage Threat of new entrant LOW 1 Substitute products like Synthetic Geotextiles is dominant and reduces the demand for JGT. We may need to strategise to take over part of existing SGT marktet. Threat of substitutes HIGH 2 Buyers of JGT have a very high bargaining power since most of the end users are Government departments which can constrain the strategic freedom of manufacturers and their ability to influence higher margins. Bargaining power of buyers HIGH 3 Suppliers of JGT have a medium bargaining power as JGT gives low contribution in terms of total product portfolio. Bargaining power of suppliers MEDIUM 4 JGT has stiff competition from coir geotextile and needs to urgently strengthen its position or else to be the preferred choice in natural geotextile products Competitive rivalry HIGH 5

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PwC March 2014 SWOT of JGT 15 Section 4 Key future considerations NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations OPPORTUNITIES Strengths The low labour costs in India and Bangladesh combined with the relatively high profit margins on JGT JGT s advantage over Synthetic Geotextiles increased interest in environmental products, cost, customization, ease with which it can be laid and the lack of maintenance Ride on United Nations Sustainable Development Programme and Millennium Development Goals for socioeconomic development, protection of environment and reduction of poverty. Increase in domestic opportunities provide JGT producers to establish a stronghold in the local market and consolidate position by commencing imports Weaknesses Inadequate R&D/ quality management facilities compared to SGTs Lack of appropriate storage and warehousing facilities impact availability, price and quality of raw jute. Undeveloped domestic market for JGT because of limited exposure to engineering projects using geo textiles A lack of market awareness & development activities undertaken at both domestic & international level

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PwC March 2014 SWOT of JGT 16 Section 4 Key future considerations NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations THREATS Strengths JGT would need to defend itself from substitutes like Geotextiles from developed countries which have more sufficient support from their government JGTs strength in the infrastructure sectors makes it reliant on government sector and state agencies and hence is affected govt sector issues (e.g. margins, specifications, nominations) Weaknesses Jute industry suffers from new technology infusion JGT does not provide a steady order Internationally recognised standard for JGT usage More stronghold of competition in the subject three areas.

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PwC March 2014 More Primary Data: More primary end user data will provide more transparency into the efficiency of supply chain Industry collaboration: Synergies between industry bodies of JGT to execute the key functions of strategy, marketing, and sales as effectively to compete with synthetic geotextiles. JGT manufacturers of India and Bangladesh needs to come together to form a professional project management (PMO) team. Standardization: We need to establish standard for all the focus areas in India and Bangladesh stabilize it popularize with International standards. In parallel a set of standards operating procedure to be defined for quality assurance of JGT according to the standard. Marketing awareness: Focused presence in fairs, events and seminars in US and EU to propagate awareness about the eco-friendliness and cost effectiveness of JGT and thus impress on such Government to specifically propagate usage of JGT as per the standard schedule. More presence of manufacturers to show their strength and create a direct relation with end user, which is very rare in this industry. Key considerations 1 17 Section 4 Key future considerations NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations

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PwC March 2014 Government projects led growth: As the product is in its intial phase of S curve, continued thrust on getting support from Govt Departments/Establishments like Irrigation, Rural Roads and Highways, Port Trust authorities, Water Works, Construction and landscape, hotels and resort projects, Railways, Defence and other similar projects/ organisations for focused usage of JGT for permanent eco-friendly solution to soil erosion problems. Increased R&D: More R&D with the data available from the sample sites to establish benefits beyond any doubt. Consumer centricity: Make JGT more nearer to the consumes. There are quite a number of steps being followed by NJB and which is yielding benefits to JGT as a whole. Still the task ahead to use the full potential of usage of JGT is a herculean one. Both apex bodies, manufacturers and Government needs to create synergies and closely work together to achieve a situation where JGT will capture 10% of market share of geotextiles in the focused sectors. Key considerations 2 18 Section 4 Key future considerations NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations

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PricewaterhouseCoopers Private Ltd Appendix Section 5

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PwC March 2014 The key stakeholders identified for discussions were: Government agencies Manufacturers who are exporter too Exporters End Customers Research bodies Specialist and consultants The primary research can be considered true and holistic considering the size of the JGT market in India and limited domestic users. Government supported organizations, which use geo-textiles, have been targeted as the first point of contact and respective Governments have been taken in confidence to ensure good response from the target respondents. For international market we have identified the various players across the value chain which has been submitted as a separate excel sheet. The database covers Consultants, Contractors, Engineers, Landscapers, Manufacturers and Suppliers Secondary/ desktop research was conducted referencing numerous texts and resources. Details are available in the paper. Information sources 20 Section 5 Appendix NJB - CFC/IJSG/21 Improving market presence of JGT - Survey & observations

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2013 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Thank You